I'd consider it as one factor since there are probably a lot of factors involved with how volatility changes such as liquidity. Suppose you were to rank which factor is involved the most. In that case, it'd be pretty hard to describe since even if a number of traders were to enter the market, without a significant amount of holding of that specific coin they aren't really going to make any waves. It'd be different for huge traders in the scene though.

And I believe trading would always be difficult regardless of the number of traders.